“We are raising our GAAP/non-GAAP fiscal 2009 estimated earnings per share to $5.72/$8.37, respectively, and upgrading Apple (AAPL) to Outperform [from Market Perform],” Morgan Keegan analysts Tavis C. McCourt and Justin T. Patterson write in a note to clients reprinted by Barron’s.
“We believe top-line trends will accelerate from current levels as the economy recovers, and that Apple has likely made it through its toughest quarter of this entire economic cycle. At 15.5 times calendar 2009 estimated non-GAAP EPS, Apple shares trade at a slight premium to its peers and the Standard & Poor’s 500, which is clearly warranted. As the economy recovers, we expect EPS growth will accelerate in 2010 and beyond and Apple’s multiple will expand,” McCourt and Patterson write.
“In hindsight, upgrading in early March would have been ideal, but we believed it was prudent to make sure Apple could make it through the most difficult period it would likely face in this recession. We are confident that after another weak quarter for Macs in June, trends should begin to improve once more. Over the course of this coming economic cycle, Apple is likely to continue to take revenue and margin share in the PC and smartphone markets, and create entirely new markets (mobile Internet devices, Apple TV, etc.) as well.” McCourt and Patterson write.
“Consumer demand for Macs has been far more resilient than we had anticipated amid macro pressures,” McCourt and Patterson write. “Overall, Mac volumes were down (3%) year over year in the March quarter, and we suspect down 5%-10% year over year, over the next two quarters due to weak educational buying. Barring a significant deterioration in economic conditions, we believe investors can take solace that Apple still appears to be taking revenue share with unit trends about as bad as they are likely to get.”
Full article – recommended – here.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Brawndo Drinker” for the heads up.]
